Ukraine protesters propose former economy minister as new PM

KYIV, Ukraine -- Leaders of Ukraine's protest movement on Wednesday proposed a top legislator as the country's next prime minister, while Russian President Vladimir Putin ordered major military exercises just across the border in a show of force and apparent displeasure over the country's new direction.

The new government, which is expected to be formally approved by parliament Thursday, will face the hugely complicated task of restoring stability in a country that is deeply divided politically and on the verge of financial collapse. The country's pro-Russian president, Viktor Yanukovych, fled the capital over the weekend.

At Kyiv's Independence Square, the heart of the protest movement against Yanukovych, the interim leaders who seized control after he fled proposed Arseniy Yatsenyuk as the country's new prime minister.

Yatsenyuk, 39, is a millionaire former banker who served as economy minister, foreign minister and parliamentary speaker before Yanukovych took office in 2010. Widely viewed as a technocratic reformer, he appears to enjoy the support of the U.S.

The top U.S. diplomat for Europe, Victoria Nuland, was overheard discussing Yatsenyuk and other Ukrainian opposition figures in a bugged phone called that was leaked, saying "I think Yats is the guy who's got the economic experience, the governing experience."

One of the first jobs for Yatsenyuk and other members of his new Cabinet will be seeking outside financial help from the European Union and the International Monetary Fund. Economists say Ukraine is close to financial collapse, with its currency under pressure and its treasury almost empty. The acting finance minister has said Ukraine will need $35 billion in bailout loans to get through the next two years.

Any such deal will require a new prime minister to take unpopular steps, such as raising the price of gas to consumers. The state gas company charges as little as one fifth of what it pays for imported Russian gas. The IMF unsuccessfully pressed Ukraine to halt the practice under two earlier bailouts, and halted aid when Kyiv wouldn't comply.

A bailout may come with the condition that Ukraine lets its currency fall against the dollar and the euro, which would painfully increase the cost of imported goods.

The European Commission's top officials held a meeting Wednesday in Brussels to discuss how the 28-nation bloc can provide rapid financial assistance to Ukraine.

In Moscow, Putin ordered military exercises to test the readiness of units in central and western Russia, Defence Minister Sergei Shoigu said in a televised statement. The exercise would "check the troops' readiness for action in crisis situations that threaten the nation's military security," he said.

Even though Russia denied the manoeuvrs had any connection to the situation in Ukraine, the massive show of force was apparently intended to showing both the new Ukrainian authorities and the West that the Kremlin was ready to use all means to protect its interests. While Russia has pledged not to intervene in Ukraine's domestic affairs, it has issued a flurry of statements voicing concern about the situation of Russian speakers in Ukraine.

NATO issued a statement saying that the alliance "will continue to support Ukrainian sovereignty and independence" as well as its "territorial integrity."

Some observers said that Russia could use force if it sees violence against Russian speakers in Crimea, which hosts a major Russian naval base and where the majority of the population is Russian-speaking.

Igor Korotchenko, a former colonel of the Russian military's General Staff, wrote a commentary in a Russian online newspaper, slon.ru, saying "if illegal armed formations attempt to overthrow the local government in Crimea by force, a civil war will start and Russia couldn't ignore it."

Fistfights broke out between pro- and anti-Russian demonstrators in the Crimean regional capital of Simferopol on Wednesday.

About 20,000 Muslim Tatars were rallied in support of Ukraine's interim leaders outside the regional parliament, where they clashed with a smaller pro-Russian rally.

The protesters shouted and attacked each other with stones, bottles and punches, as police and leaders of both rallies struggled to keep the two groups apart.

One health official said at least 20 people were injured, while the local health ministry said one person died from an apparent heart attack. Tatar leaders said there was a second fatality when a woman was trampled to death by the crowd. Authorities did not confirm that.

The Tatars are a Muslim ethnic group who have lived in Crimea for centuries. They were brutally deported in 1944 by Soviet dictator Josef Stalin, but have since returned.

The tensions in Crimea -- a peninsula in southern Ukraine that is home to Russia's Black Sea Fleet -- highlight the divisions that run through this country of 46 million, and underscore fears the country's mainly Russian-speaking east and south won't recognize the interim authorities' legitimacy.